Barclays add £400m to PPI provision

Barclays, which is currently being restructured under new boss Jes Stanley, has booked a 21% drop in first half profits to £2.06bn though Stanley says "no reason" to adjust plan in light on Brexit vote

Barclays has reported a 21 per cent drop in first half profits to £2.06 billion as it booked a further £400 million provision to cover Payment Protection Insurance claims.

Barclays, which is currently undergoing a global restructuring under new chief executive Jes Stanley, warned the UK's decision to leave the EU “would likely negatively impact” a number of its portfolios.

Stanley announced in March Barclays would offload its businesses in Africa and France to focus on its US and UK operations.

He notes in a second quarter update the restructuring remains the “right plan for Barclays” , and he see “no reason to adjust it, or the pace of delivery, in light of the vote by the UK last month to exit the EU.”

He added: “Given the inherent diversification of our business model, coupled with a longstanding conservative approach to risk, Barclays is well positioned to weather any potential economic consequences of that decision.

“We are very much open for business, and fully committed to supporting our customers and clients, and the real economy, through this period of uncertainty.”

However the bank warned Brexit has increased the risk of recession, and warned lower growth, higher unemployment and falling UK house prices could hit a number of its operations, notably its mortgage offering.

Barclays also warned if Brexit negotiations end with the UK's financial sector losing “passporting” rights it would need to make “alternative licensing arrangements in EU jurisdictions” where it operates.

Passporting allows financial services firms to carry out permitted activities within the European Economic Area (EEA) to any other EEA member state as set out in the EU single market directives.

Barclays said: “The result of the referendum means that the long-term nature of the UK's relationship with the EU is unclear and there is uncertainty as to the nature and timing of any agreement with the EU.

“In the interim, there is a risk of uncertainty for both the UK and the EU, which could adversely affect the economy of the UK and the other economies in which we operate.”

The bank has booked a further £400 million charge for payment protection insurance (PPI) in the second quarter, taking its total provisions to £7.8 billion.

Total income in the six months to June was down nine per cent to £11 billion, and net profits in the second quarter – April to June – were down 33 per cent to £803 million (H2 2015: £1.2 billion).